Bad Faith Eviction Ontario: What Landlords Need to Know

Introduction

Bad Faith Eviction Ontario claims have become an increasingly important issue for residential landlords. Allegations that a landlord acted in bad faith following an N12 Notice for Landlord’s Own Use or an N13 Notice for demolition, conversion, repairs, or renovations can expose landlords to significant financial liability under Ontario’s Residential Tenancies Act, 2006.

Why This Issue Matters

Bad faith allegations can have serious financial consequences. Where a former tenant successfully establishes that a notice was given in bad faith, the LTB has authority to award a variety of remedies, including:

• General compensation;
• Rent differential;
• Moving and storage expenses;
• Administrative fines; and
• Other remedies authorized under the RTA.

In some circumstances, the potential financial exposure can greatly exceed the amount of rent that was originally being paid for the rental unit. Bad faith allegations can also create evidentiary challenges. Unlike many rent arrears cases, disputes involving bad faith often focus on the landlord’s intentions, credibility, and conduct before and after the tenant vacates. As a result, documentation, timing, communications, and subsequent use of the rental unit may all become relevant. For landlords seeking possession for legitimate reasons, understanding how these issues are assessed before serving a notice may help reduce future disputes.

Common Mistakes Made by Landlords

 Assuming Good Intentions Alone Are Sufficient

Many landlords believe that because they honestly intended to occupy a unit or complete renovations when the notice was served, the inquiry ends there. Ontario case law suggests otherwise. The LTB may examine not only the circumstances existing when the notice was served, but also events occurring afterward when assessing whether the landlord acted in good faith.

Failing to Document Plans

Landlords frequently have legitimate reasons for serving an N12 or N13 notice. However, if those plans are not documented, proving them later may become more difficult. Evidence such as purchase agreements, construction plans, permits, correspondence, financing arrangements, and occupancy plans may become relevant in future proceedings.

Changing Plans Without Understanding the Risks

Circumstances sometimes change after a notice is served.

• Employment opportunities arise.
• Family situations change.
• Purchasers withdraw from transactions.
• Construction costs increase.

While an unforeseen change in circumstances does not automatically establish bad faith, landlords should understand that subsequent conduct may later be scrutinized by the LTB.

Poor Communication

Landlords occasionally assume that because a tenant has already vacated, no further communication is necessary. However, communications occurring after service of a notice may become relevant if a former tenant later alleges bad faith.

Treating an N12 or N13 as a Convenient Alternative

The LTB and Ontario courts have repeatedly emphasized that N12 and N13 notices are intended for specific statutory purposes. Using those provisions to achieve a different objective may create significant legal risk.

Legal Decision on the Issue

 Facts

One of the leading Ontario decisions discussing good faith in the context of an N12 notice is Fava v. Harrison. The case arose from a dispute concerning a landlord’s intention to recover possession of a rental unit for personal occupancy. The tenant argued that the landlord lacked the necessary good faith required by the RTA.

The Decision

The Divisional Court confirmed an important principle that continues to be cited in residential tenancy proceedings. The Court held that the central issue is whether the landlord genuinely intends to occupy the rental unit.  The Court further observed that a landlord’s motives are largely irrelevant. The question is not whether occupying the rental unit is the landlord’s best financial decision, most convenient option, or preferred course of action. Rather, the issue is whether the landlord genuinely intends to reside in the unit.

At the same time, the Court recognized that the landlord’s conduct and surrounding circumstances may be considered when determining whether the stated intention is genuine.

Why the Decision Matters to Ontario Landlords

Fava v. Harrison is frequently misunderstood. Some landlords assume the decision means that only their stated intention matters. That is not what the Court said. The decision confirms that the primary issue is genuine intent. However, adjudicators are entitled to examine surrounding circumstances and conduct when determining whether that intention is credible.

For example, the LTB’s Interpretation Guideline on personal use applications notes that a landlord’s previous N12 or N13 notices, prior occupancy history, and other surrounding circumstances may be considered when assessing good faith. In practical terms, landlords should expect that their actions will be examined alongside their stated intentions.

A landlord who genuinely intends to occupy a rental unit and whose conduct is consistent with that intention will generally be in a stronger position than a landlord whose actions suggest otherwise.

Practical Considerations for Ontario Landlords

Landlords contemplating an N12 or N13 notice may wish to consider whether their intended plans can be supported by objective evidence. Depending on the circumstances, relevant documentation may include:

• Purchase and sale agreements;
• Renovation plans;
• Permit applications;
• Contractor estimates;
• Correspondence regarding occupancy arrangements;
• Financing documentation; and
• Other records supporting the intended use of the property.

Landlords should also recognize that the obligation to act in good faith may not necessarily end on the date the notice is served. Ontario jurisprudence has increasingly recognized that post-notice conduct may be relevant when assessing bad faith allegations. Where circumstances change unexpectedly after service of a notice, careful documentation may assist in explaining why the original plan was not ultimately carried out.

As discussed in the LTB’s Interpretation Guideline regarding personal use and purchaser-use applications, the Board frequently examines both the landlord’s evidence and the surrounding circumstances when determining whether the statutory requirements have been satisfied.

Conclusion

Bad faith allegations have become an increasingly important issue in Ontario residential tenancy law. While the Residential Tenancies Act provides landlords with mechanisms to recover possession of rental units in certain circumstances, those provisions carry corresponding obligations. The Divisional Court’s decision in Fava v. Harrison confirms that the key issue is whether the landlord genuinely intended to use the rental unit for the purpose stated in the notice. At the same time, surrounding conduct and circumstances may be relevant when assessing whether that intention was genuine.

For Ontario landlords, careful planning, documentation, and consistency between stated intentions and subsequent actions may significantly reduce the risk of future bad faith allegations.

Disclaimer

This article is provided for general informational purposes only and does not constitute legal advice. Every tenancy is unique and the outcome of any particular matter will depend upon its specific facts and circumstances. Reading this article does not create a paralegal-client, lawyer-client, or solicitor-client relationship. If you require legal advice regarding your situation, you should obtain professional legal assistance.

 Footnotes

1. Residential Tenancies Act, 2006, SO 2006, c 17, ss 48, 49 and 50.
2. Residential Tenancies Act, 2006, SO 2006, c 17, s 57. See also amendments enacted by the Protecting Tenants and Strengthening Community Housing Act, 2020.
3. Residential Tenancies Act, 2006, SO 2006, c 17, s 57.
4. Fava v. Harrison, 2014 ONSC 3352 (Div Ct).